[BNPL per le Aziende] E-commerce to drive growth in electronic payments

Similar to many other

emerging countries, Bangladesh economy is heavily reliant on cash. In a country with an adult population of over 100 million, only eight million people use debit cards, and less than one million people use credit cards.

With the ongoing “Digital Bangladesh” initiative by the government and thereby the e-commerce industry booming in the foreground, there is an immense opportunity to foster rapid growth in the segment by leveraging technology and making the commerce experience truly digital, allowing people to buy and pay seamlessly in a secure manner.

As per the eCommerce Association of Bangladesh (e-CAB), the industry is all set to witness tremendous growth over the next three years, increasing 40 percent per month from 36 percent currently.

Though e-commerce made its inroads in Bangladesh back in the 1990s, a lack of online payments facility and low internet penetration hindered growth during the initial years. The game changing milestones for the industry came in 2009 and 2013 when Bangladesh Bank introduced online payments in the country and allowed the use of both credit cards and debit cards to buy products and services online.

What started primarily as a Business-to-Business (B2B)-focused industry is now thriving in the Business-to-Consumer (B2C), Customer-to-Customer (C2C) and Business-to-Employee (B2E) segments as well. In Bangladesh, a late entrant to ride the e-commerce wave, the ecosystem is still evolving to address the challenges and thereby realise the full capacity of this industry, which can significantly contribute to the country’s economy.

The key areas which require intervention to support the e-commerce industry include developing delivery mechanisms and infrastructure, increasing merchant acceptance, driving adoption among consumers, enablement through mobile and online channels, impetus to online transactions and security against frauds.

Low levels of financial literacy and awareness, lack of friendly user interface and fear of security, are some of the other factors that have hindered the adoption of electronic payments by e-commerce consumers in Bangladesh. With e-commerce migrating to mobile phones, it is imperative to create a foundation that facilitates innovative payment solutions, supported through a robust infrastructure. E-commerce is an enabler and the move towards e-commerce is high in the country with many leading businesses like chaldal.com, easy.com, meenabazar.com, ajkerdeal.com, hungrynaki.com, foodpanda.com, aarong.com, rokomari.com, flynovoair.com, uabdl.com, and flyregent.com making success stories.

There are measures that would be instrumental in encouraging people to go cashless. It needs to start with cementing consumer confidence in e-payments through working collaboratively with stakeholders to spread awareness and educate them of the benefits and convenience of e-payments. Development of user-friendly interfaces and seamless transactions on mobile devices can also significantly propel the adoption of digital payments among consumers.

Robust telecom and internet connectivity that aims to provide universal access will also snowball the growth of e-commerce in Bangladesh. A connected mobile device in the hands of a customer presents an opportunity to bring about convergence across channels.

Acceptance should be encouraged among merchants in high-usage categories like payments for utilities, government payments, insurance, online shopping and so on. This can be done by simplifying the merchant on-boarding process by acquiring banks and exploring possibilities of incentivising merchants when they sign up for accepting electronic payments.

Mechanism to make online payments to government agencies (like tax payments), and waiver of additional charges, if any for digital transactions, will help drive awareness and volumes for e-payments.

Adoption of second-factor authentication (2FA), which allows users to add an additional security layer in the form of a password or unique code, will help assuage fear among hesitant customers while transacting online.

The payments industry also must give efforts to prevent data from being stolen by adhering to the highest data security standard established by the Payment Card Industry (PCI) Security Standards Council, and encourage the adoption of point-to-point encryption technology. The industry must have strong fraud monitoring framework. Stakeholders and the government must promote systems that detect fraud sooner and more accurately, streamline fraud management operations and make business grow.

Today, commerce is all about understanding consumer requirements and innovation to cater to their needs. The gaps in the adoption of electronic payments for e-commerce transactions have to be addressed collaboratively by the industry, financial institutions, merchant partners, regulators and payment facilitators.

As Bangladesh becomes more integrated with the world, the country needs to ensure that its citizens have unfettered access to the international e-commerce market and vice versa. While the ecommerce industry is predicted to contribute significantly to the economy and create lucrative opportunities, the right set of infrastructural framework will ensure smooth implementation and management.

(Source: TheDailyStar)

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